* Qatar to develop world's largest gas field shared with
* New project to start within 7 years, produce 400,000 boe/d
* Doha faces stiff competition from U.S, Australia and
* Iran says will ramp up production from the shared field
(Adds Shell comment from Japan)
By Tom Finn and Mark Tay
DOHA/CHIBA, April 4 Qatar has lifted a
self-imposed ban on development of the world's biggest natural
gas field, the chief executive of Qatar Petroleum said on
Monday, as the world's top LNG exporter looks to see off an
expected rise in competition.
Qatar declared a moratorium in 2005 on the development of
the North Field, which it shares with Iran, to give Doha time to
study the impact on the reservoir from a rapid rise in output.
The vast offshore gas field, which Doha calls the North
Field and Iran calls South Pars, accounts for nearly all of
Qatar's gas production and around 60 percent of its export
"We have completed most of our projects and now is a good
time to lift the moratorium," QP Chief Executive Saad al-Kaabi
told reporters Monday at Qatar Petroleum's headquarters in Doha.
"For oil there are people who see peak demand in 2030, others in
2042, but for gas, demand is always growing."
The development in the southern section of the North Field
will have a capacity of 2 billion cubic feet per day, or 400,000
barrels of oil equivalent, and increase production of the field
by about 10 percent, when it starts production in five to seven
years, he said.
Qatar is expected to lose its top exporter position this
year to Australia, where new production is due to come on line.
The LNG market is undergoing huge changes as the biggest
ever flood of new supply is hitting the market, with volumes
coming mainly from the United States and Australia.
President Vladimir Putin said last Thursday Russia aimed to
become the world's largest LNG producer.
The flurry of LNG production has resulted in global
installed LNG capacity of over 300 million tonnes a year, while
only around 268 million tonnes of LNG were traded in 2016,
Thomson Reuters data shows.
That has helped pull down Asian spot LNG prices LNG-AS by
more than 70 percent from their 2014 peaks to $5.65 per million
British thermal units (mmBtu).
Qatar's decision to lift the moratorium, which came as a
surprise to many, is seen as a sign the country will not sit by
idly as others scoop up customers in a growing market.
The announcement coincides with the start of a major LNG
industry conference this week in Japan, attended by many of
Qatar's competitors and potential new customers.
"It is a declaration of growth. They are back in the game to
grow again, and which of course they are very capable of,"
Maarten Wetselaar, director of Integrated Gas and New Energies
at Royal Dutch Shell, said at the LNG conference in
Japan on Tuesday.
"There's a wedge of (LNG) demand opening up in the
mid-2020s... (so) this is not a bad time to start looking at
developing it," he added.
An energy advisor to the Qatar government said he saw it as
a preemptive step to warn competitors who are considering LNG
investments that Qatar remains an aggressive seller.
"It will certainly give rivals something to chew on," he
said, declining to be named as he was not authorised to speak
Kaabi said low prices would not pressure Qatar.
"By the time this project comes online in five years or so
it should be a good market for gas," he said.
IRAN NO ENEMY
Iran, which suffers from severe domestic gas shortages, has
made a rapid increase in production from South Pars a top
priority and signed a preliminary deal with France's Total
in November to develop its South Pars II project.
Iran's oil minister last week vowed to ramp up production of
its part of the shared field.
"Iran's gas production in South Pars can exceed Qatar's
before the end of new Iranian year (ending March 20, 2018),"
Zanganeh was quoted as saying by the Tasnim news agency on
Total was the first Western energy company to sign a major
deal with Tehran since the lifting of international sanctions.
Kaabi said the decision to lift the moratorium was not
prompted by Iran's plan to develop its part of the shared field.
"What we are doing today is something completely new and we
will in future of course ... share information on this with them
The economy of Qatar, a future World Cup host with a
population of 2.6 million, has been pressured by the global oil
slump and in 2015 QP dismissed thousands of workers and has
earmarked a number of assets for divestment.
QP is merging two LNG divisions, Qatargas and RasGas, to
save hundreds of millions of dollars.
In February, Kaabi said Qatar would focus on seeking
international opportunities by exploring for oil and gas in
Cyprus and Morocco.
But the current low LNG price environment may deter
investment in new supply projects, bringing tighter supplies and
price spikes in the future.
(Additional reporting by Oleg Vukmanovic and Bozorgmehr
Sharafedin; Writing by Rania El Gamal and Henning Gloystein;
Editing by Jason Neely, David Evans and Christian Schmollinger)